Jul 03

What is a Forex Broker?

Reading Time: 3 mins

On the financial markets, one of the most important players in each transaction or trading deal is a Forex broker. If you are a mainstay in trading, you have definitely heard of such a thing as brokerage. So what or who is a Forex broker and why is he important? Let us look deeper into Forex brokers so as to answer these questions.


A Forex Broker

Forex brokers are firms or companies that provide a trading platform for the parties interested in Forex trading. The platform allows to buy or sell the stocks and also can be short term savings platform as you can store your funds in your personal account. Financial institutions such as banks also act as Forex brokers as they allow for the exchange of funds through their hands.


How Do Forex Brokers Make Their Money?

Another question that you may ask yourself is how these brokerage firms make the money essential for their sustenance.

Forex brokers make their money in two ways, by spreads or by charging some commission. The spread is the difference between the bid and asking price for the security. The bid price is a quoted amount while the asking price is an amount you are supposed to pay for the security. The difference goes to the Forex broker as a fee.

Commissions are normally charged as a percentage of your trade volume. The commission rate varies from one broker to another with other broker having different rates per tier. That is some clients may have higher rates while others may be totally exempted from paying commissions altogether.

Other commissions that you may incur are payment processing commission that also depends on the amount you are either depositing or withdrawing. In most cases, minimal or no commission is charged from deposits.


Getting A Good Broker

A successful stint while trading is highly determined by the broker you pick among many other factors. This means that you need to get the best broker for you to make money from your trading stint.

There are some of the qualities that you need to look for in getting a good broker.

  • Legitimacy

The most important of all considerations is the legitimacy of the Forex broker that you want to utilize. Legitimacy is analyzed by the quality of the broker’s website and, most importantly, if it is regulated and authorized.

On the regulation and authorization, you can check with the website of the regulatory bodies of the region where it is located. An authorized broker is a proof of credibility and the safety of your money you entrust a broker with.

  • Account Types

Different brokers offer different account types to meet the needs of various clients. As such you need first to look at the account types that a broker offers. The most common account types are the standard and professional accounts.

The standard account is suitable for both experienced and novice traders and has the basic trading conditions optimal for small and medium scale traders, while the professional one is suitable for large scale traders with a penchant for a high trading volume.

Other account types include the demo account which is suitable for novice trader as a practicing tool. The Islamic account is a swap free account that gains no interest, compatible with the Islamic sharia law. Finally, we have the crypto account that deals exclusively with cryptocurrency units.

These are just some of the many account types that brokers may have.

  • Trading Platform

All brokers that have an online website have their own trading platform. A platform is a software that allows you to navigate the site or application and execute your trades. There are many different platforms each coming with different features. Some of the features include mobile and computer compatibility, automated trading and tools such as charts and drawing tools.

When selecting a broker to analyze their trading platforms and select one that has a prestigious platform with divergent features that can boost your trading.

These are just a few of the qualities of a good broker that you can opt for when venturing into stock trading.



Forex brokers, such as are important links when it comes to trading on the financial markets. Be sure to get a good broker with utter credibility for successful trading.


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